Flash Memory, Inc.

Exhibit 1 Income Statements, 2007 - 2009 ($000s except earnings per share)

2007 2008 2009 2010 2011 2012

Net sales $77,131 $80,953 $89,250 120000 144000 144000

Cost of goods sold $62,519 $68,382 $72,424 97320 116784 116784
Gross margin $14,612 $12,571 $16,826 22680 27216 27216

Research and development $3,726 $4,133 $4,416 6000 7200 7200

Selling, general and administrative $6,594 $7,536 $7,458 10032 12038.4 12038.4
Operating income $4,292 $902 $4,952 6648 7977.6 7977.6

Interest expense $480 $652 $735 937.21 1323.31 1558.25

Other income (expenses) -$39 -$27 -$35 50 50 50

Income before income taxes $3,773 $223 $4,182 5,661 6,604 6,369

Income taxes (a) $1,509 $89 $1,673 2264.32 2641.72 2547.74

Net income $2,264 $134 $2,509 3,396 3,963 3,822

Earnings per share $1.52 $0.09 $1.68 2.27798 2.65795 2.65795

(a) In years 2007 and after, Flash's effective combined federal and state income tax rate was 40%.
Flash Memory, Inc.

Exhibit 2 Balance Sheets, 2007 - 2009 ($000s except number of shares outstanding)

December 31,
2007 2008 2009 2010 2011 2012

Cash 2536 2218 2934 3960.00 4752.00 4752.00

Accounts receivable 10988 12864 14671 19726.03 23671.23 23671.23
Inventories 9592 11072 11509 13864.77 16637.72 16637.72
Prepaid expenses 309 324 357 480.00 576.00 576.00
Total current assets 23425 26478 29471 38030.79 45636.95 45636.95

Property, plant & equipment at cost 5306 6116 7282 8182.00 9082.00 9982.00
Less: Accumulated depreciation 792 1174 1633 2179.15 2860.30 3608.95
Net property, plant & equipment 4514 4942 5649 6002.85 6221.70 6373.05

Total assets 27939 31420 35120 44033.64 51858.65 52010.00

Accounts payable 3084 4268 3929 4799.34 5759.21 5759.21

Notes payable (a) 6620 8873 10132 14306.00 16846.00 13185.57
Accrued expenses 563 591 652 876.00 1051.20 1051.20
Income taxes payable (b) 151 9 167 226.43 264.17 254.77
Other current liabilities 478 502 554 744.00 892.80 892.80
Total current liabilities 10896 14243 15434 20951.77 24813.38 21143.55

Common stock at par value 14.91662 14.91662 14.91662 15.00 15.00 15.00
Paid in capital in excess of par value 7980 7980 7980 7980.00 7980.00 7980.00
Retained earnings 9048 9182 11691 15087.47 19050.05 22871.66
Total shareholders' equity 17042.91662 17176.91662 19685.91662 23082.47 27045.05 30866.66

Total liabilities & shareholders' equity 27938.91662 31419.91662 35119.91662 44034.25 51858.43 52010.21

Number of shares outstanding 1491662 1491662 1491662 1491662 1491662 1491662

(a) Secured by accounts receivable.

(b) To avoid a penalty for underpayment of income taxes, Flash made equal estimated tax payments quarterly on the 15th of
April, June, September, and December of each year. The total of these four quarterly payments was required to equal at
least the lesser of (a) 90% of the taxes that would actually be incurred in the same year, or (b) 100% of the taxes due
on income of the prior year.

more than 70 % than 9.25%

service to get loan - factroing service
to take loan
factoring service - collateral given to take loan . Accounts receibales
For informational purposes only:

Notes payable / accounts receivable 0.602475427739352 0.689754353233831 0.690614136732329 0.725234722 0.711665509 0.557029288
Notes payable / shareholders' equity 0.388431167481708 0.516565353159408 0.514682663529436 0.619777585 0.622886605 0.427178414
Notes payable / total capital 0.279762638997965 0.340615293685343 0.33979570501596
Flash Memory, Inc.

Exhibit 3 Key Forecasting Assumptions and Relationships for 2010 Through 2012

Line Item Assumption or Ratio

Cost of goods sold 81.10% of sales

Research and development 5.00% of sales
Selling, general and administrative 8.36% of sales
Interest expense Beginning of year debt balance × interest rate
Other income (expenses) $50,000 of expense each year

Cash 3.30% of sales

Accounts receivable 60 days sales outstanding
Inventories 52 days of cost of good sold
Prepaid expenses 0.40% of sales
Property, plant & equipment at cost Beginning PP&E at cost + capital expenditures
Accumulated depreciation Beginning A/D + 7.5% of beginning PP&E at cost

Accounts payable 30 days of purchases

Purchases 60% of cost of goods sold
Accrued expenses 0.73% of sales
Income taxes payable 10% of income taxes expense
Other current liabilities 0.62% of sales
e each year

e taxes expense
Flash Memory, Inc.

Exhibit 4 Selected Financial Information for Flash Memory, Inc., and Selected Competitors, 2007 through 2009

Flash Memory, Inc. Micron Technology

2007 2008 2009 30-Apr-10 (a) 2007 2008 2009 30-Apr-10 (a)

Sales ($ millions) 77 81 89 5,688 5,841 4,803

EPS ($) 1.52 0.09 1.68 -0.42 -2.10 -2.29 1.46
Dividend per share ($) -- -- -- -- -- --
Closing stock price ($) n/a n/a n/a 7.25 2.64 10.56 9.35
Shares outstanding (millions) 1.492 1.492 1.492 769.1 772.5 800.7 847.6
Book Value per share ($) 11.43 11.52 13.20 10.08 8.00 5.81 6.61
ROE 13.28% 0.78% 12.75% -4.13% -26.21% -39.43% 21.00% 7925.06 10684
Capitalization (book value) 0.258237
Debt 28% 34% 34% 24% 31% 40% 33%
Equity 72% 66% 66% 76% 69% 60% 67%
Beta coefficient n/a 1.25

SanDisk Corporation STEC, Inc.

Sales ($ millions) 3,986 3,351 3,567 189 227 354

EPS ($) 0.84 -8.82 1.83 3.71 0.20 0.09 1.47 1.29
Dividend per share ($) -- -- -- -- -- --
Closing stock price ($) 33.17 9.60 28.99 39.84 8.74 4.26 16.34 13.90
Shares outstanding (millions) 227.7 225.3 227.4 229.3 49.8 50.0 49.4 50.3
Book Value per share ($) 22.64 15.27 17.18 18.13 3.72 3.63 5.65 5.48
ROE 3.70% -57.74% 10.63% 17.87% 5.40% 2.36% 26.06% 18.90%
Capitalization (book value)
Debt 15% 22% 21% 19% 0% 0% 0% 0%
Equity 85% 78% 79% 81% 100% 100% 100% 100%
Beta coefficient 1.36 1.00

(a) Security analyst estimates for year-end EPS $ and Return on Equity; actual data on April 30, 2010, for all other items. BETA LEVERAGES
BOOK VALUE OF DEBT 975.129025 0.258 1.25 1.03
BOOK VALUE OF EQUITY 4157.129 0.10674283 1.36 1.27814059599964
CAPITAL 5132.25802 0 1 1
SANDISK MARKET VALUE OF EQUITY 9135.312 FLASH MEMORY
TOTAL 10110.441 AVERAGE INDUSTRY BETA 1.10271353199988 DEBT.EQUITY
21.95%
DEBT/EQUITY 0.10674283 DEB 18%
EQ 82%
T 40%
BOOK VALUE OF DEBT 0 RF 3.70%
BOOK VALUE OF EQUITY 275.407346 ERP 6%
CAPITAL 275.407346
STEC MARKET VALUE OF EQUITY 699.17 BETA 1.25
TOTAL 699.17
COST OF EQUITY 11.2%
DEBT/EQUITY
COST OF DEBT 7.25%

WACC 9.96%
1 financial forcasting with the existing busbiness without the new product line - 2010,2011, 2012
2 calculate the PV cost of capital of the firm.
3 new product line - new equipment - NPV ( INCREMENT CF OF NEW EQUIPMENT)
4 FINANCIAL FORCASTING WITH NEW EQIPMENT AND NOTES PAYABLE ( EXTERNAL LOAN)
5 FINANCIAL FORCASTING WITH NEW EQUIPMENT AND EQUITY/SHARE.
6 WHICH FINANCHING OPTION IS BETTER.

2010 2011 2012

SALES
OTHER INCOME
TOTAL REVENUE 0
COGS

R&d

S&A EXPENSE

OPERATING EXPENSE
2010 2011 2012 2013 2014
SALES 21600 28000 28000 11000

COST 2200
WC 26.15 5648.4 7322 7322 2876.5 1307.5
7848.4 1673.6 0 -4445.5 -1569

LESS COGS 79% 17064 22120 22120 8690

LESS R&d 0 0 0 0

SALES EXPENSE 8.36% 2105.76 2340.8 2340.8 919.6

OPEARTING PROFIT 2430.24 3539.2 3539.2 1390.4

TAX

NET INCOME 1458.144 2123.52 2123.52 834.24

DEP 440 440 440 440

NET INCOME +DEP 1898.144 2563.52 2563.52 1274.24

CHANGE IN WC 1673.6 0 -4445.5 -1569

NET CASH FLOW 224.544 2563.52 7009.02 2843.24

-7848
1 224 0.909091 203.6364
2 2564 0.826446 2119.008
3 7009 0.751315 5265.965 10850.5
4 2843 0.683013 1941.807
5 2126 0.620921 1320.079

NPV 3002.496
IRR 21.9%
010,2011, 2012 FINANCAL PLANNING

CAPITAL BUDGETING

FINCANCING

RECEVIABLES
PAYABLES

#DIV/0!

2010 2011 2012

INVENTORY 0 0 0

ALWAYS LOOK AT INCREMENTAL SALES WHEN INVESTMENT

2015
5000

3950
0

418

632

379.2

440

819.2
1307.5

2126.7